Idaho's Weekly Journal of Local & National Commentary Week
2815

"The problem is we don't have enough paper to print more paper money for the
global economy because we ran out of trees. Perhaps if we use scientific
notation to indicate the 15 zeroes in our new U.S. Quadrillion Dollar Note
typically used to buy a loaf of bread, and thus reduce
$1,000,000,000,000,000to$1
x 1015, we can save on paper.”–
Fed Reserve Chief, Helicopter Ben

“Since paper money obtains its value by the sheer fact that it’s created out
of thin air and printed by the government’s central bank, we can easily
switch to printing money on rectangular Cow Crap. Later, we can expand the
printing of our U.S. money on Buffalo Chips and then on Horse Shit.”
– Secretary of the Treasury, Henry Paulson, explaining basic Keynesian
Econometrics to U.S. Congressional Banking Committee

Paper
money not backed by anything has no value. The Federal Reserve Note (FRN)
is created out of thin air. It is not an IOU. It is not a promissory
note. It is not a real contract. It does not agree to pay to the bearer on
demand 1 troy oz of gold or silver or anything else upon presentation to the
U.S. Treasury. The FRN is not backed by, or a receipt for, America’s GDP
because the Federal Reserve does not own everybody’s house, car, TV, and
everything else and thus it is ludicrous to claim that the U.S. Dollar is backed
by our GDP. The Fed can’t print paper money for collateral it doesn’t own.

Therefore,
the Federal Reserve Note is a fake contract that has been transformed from an
historically
redeemable Gold or Silver Certificate to a meaningless piece of paper. The
American Dollar has been morphed into a piece of valueless manipulated paper,
the management of which has illegally been turned over by the U.S. Congress
to a private corporation, the Federal Reserve, which now acts as a
quasi-governmental agency catering to their buddies in the investment
community, Congress, and other special interest groups, including those who wage
interventionist
wars all over the world for fun and profit.

The
Federal Reserve is comprised of Keynesian Econometricians who were schooled
in state collectivism, or some variation on the theme of socialism, and were
taught British economist Lord John Maynard Keynes’ baloney that by leading the economy with a
continual expansion of the money supply, e.g. the fake Federal Reserve Note, the
central bank Bozos can create a wealthy robust market. Nothing could be further from the
truth.

But how
did they ever come to such an absurd conclusion?

The
Keynesian dumbies noticed that if you inflated the economy with paper money
and credit, it appears to create a mini-boom. Those who get the new money
first run out and spend it and thus it appears everybody got wealthier. But
if one looks further, one soon discovers that the mini-boom turns into price
inflation as everybody eventually figures out that what really happened is
that somebody inflated the money supply and he who receives the new money
last gets hit with the highest price increases. Increasing the paper money
supply – especially non-backed paper money – may trick the people
temporarily into thinking there is an economic boom but it does not increase
real capital or stimulate the transformation of new ideas into time and
labor saving devices. If anything, it teaches people how to cheat the
system and print up tons of fake paper for their own benefit. If Keynes was
correct, which he isn’t, then we should hire lots of counterfeiters to print
up tons and tons of paper money and flood the economy with counterfeit
money, thus creating all kinds of new wealth. Sorry, Charlie, but it
doesn’t work like that. In fact, it works exactly the opposite and causes
poverty.

Fast
forward to today, the year 2007.

This is
exactly what the U.S. has done, i.e. created a huge counterfeiter, the
Federal Reserve System, to print up tons and tons of non-backed paper money
and flooded the economy with it in their zeal to make America wealthy by
following the fallacies of Keynesian Econometrics. Not only have the
Federal Reserve central bankers flooded the market with inflated paper
money, they have also encouraged member banks and investment houses to
create even more paper money by creating, bundling, and disseminating
Federal Reserve Notes with subprime mortgages, non-backed derivatives, hedge
funds, structured investment vehicles, and other pieces of paper not backed
by anything. Even the subprime mortgages are not backed by the value of
real homes because the prices of houses are tumbling.

Remember, in Keynesian economics, money is a piece of paper not backed by
anything. It has no intrinsic value. Today's paper money is not a receipt, not a
promissory note, not an IOU for anything. It is not a contract,
not a mercantile receipt for stored goods, not redeemable for a stated quantity of gold
or any other tangible commodity, and not a valid medium of
economic exchange. It is called “forced money,” or fiat currency since it
is forced upon the public by the government.

There now
exists so much hyper-inflated paper money, bundled with subprime mortgages
and other pieces of highly manipulated commercial paper, that nobody knows
which investment institution will be defaulting on their investments next
because nobody knows who is holding how much of the chopped up pieces of
fake commercial paper, including the parent banks that keep that new paper
in subsidiary investment corporations AND THUS DO NOT HAVE TO REPORT IT ON
THEIR PARENT BOOKS AS MONEY OR ASSETS until, or if, they bring it across.
Nobody knows how to value any of these pieces of
fake paper because they don't trade in the market. So banks are refusing to lend more fake paper, including
Federal Reserve Notes, to each other or anybody else at ANY interest rate
because every bank is afraid the borrower won't be able to pay them back.

The banking crisis
is not a lack of liquidity problem. It is an evaluation problem.

How does one
evaluate trillions and trillions of chopped up commercial paper (and its
foundational Federal Reserve Notes) not tied to any set of international
standard of weights and measures, such as 1 troy oz containing 419 grains of
.999 fine gold, for example? Destroy your measuring stick and you
destroy all future measurements and calculations. Which means, you
destroy the free market. If we were on a 100% gold standard, all the
bankers would have to do is walk into their vaults and point to the gold
coins and bars to show their collateral. Today, all the bankers can do
is point to each other's trillions and trillions of verbal bull shit, and
not lend to each other for fear of losing the fake paper they now hold.

This greatly
bothers the Federal Reserve Bozos because they erroneously think the name of
the game is to inject trillions and trillions more paper money into the
economy. That’s what Lord John Maynard Keynes taught them, lead the
economy with a "targeted rate of (price or money) inflation" to create
wealth and the dummies believe it. They earned their PhDs at Harvard
and other universities by writing stupid dissertations using differential
calculus in phony attempts to support Keynes’ daydreams. Then they got
themselves appointed to the Federal Reserve so they could save humanity and
provide enough Keynesian crap for the editors at the Wall Street Journal to
chime in with their ridiculous Op Ed support pieces and pretend like they're
supporting the free market, too. Welcome to Alice in Wonderland.

Since the
Federal Reserve erroneously thinks that injecting more and more paper money
into the economy will solve the stagflation problem, they continue to dream
up more and more methods by which to try to stimulate everybody to borrow
borrow borrow, spend spend spend, and according to current Keynesian
Econometrics, do it faster faster faster. Fed Chief Ben Bernanke and his
fellow monetary interventionists think the problem is (1) not enough fake
paper money and (2) not enough fake paper money being spent fast enough – if
you can believe that.

Now the Keynesians are concerned about the velocity
of spending. Next they will be concerned about the acceleration of the velocity of spending.
The Fed truly has modeled itself after physics in an absurd effort to "make
economics more scientific." But free market economics, the Austrian
School of Thought called Praxeology, or Human Action, already is scientific
and doesn't require the use of differential or integral calculus. It
requires subjective thinking, not erroneous quantitative modeling of
historical market prices.

The very
problem that classical free market economists warned would happen if one
goes off the gold standard and continually inflates the money supply is now
happening and the stupid Keynesian economists at the Federal Reserve are
doing exactly the wrong thing to solve the problem they created in the first
place. Namely, you cannot lead the economy with a continual inflation of
the money supply and make a nation wealthy. All that will happen will be
price inflation and all kinds of unintended economic consequences, in
addition to the many inequities that monetary inflation heaps on those with
fixed incomes such as senior citizens and poor people.

If
Keynesian Econometrics is not good for America, globalizing it all over the
world is even worse.

But that
is exactly what the Federal Reserve, teaming up with the central bankers of
the European Central Bank, the British Central Bank, the Swiss Central Bank,
the Canadian Central Bank, the Bank of Japan, the Swedish Central Bank, and
other central bankers are conspiring to do on an international basis as of
yesterday. Their plan to inject $40 billion more into the U.S. within the
next two weeks, with the other central banks also injecting varying amounts
of both U.S. Dollars and their own non-backed National Toilet Papers, will
cause severe global hyper-inflation, the likes of which nobody has seen
since the Great German Hyper-Inflation of the 1920’s. See below from my
article on
09-25-2007 Wherein lies the value of today's paper money?... The
solution: abolish fractional reserve central banking, the Federal Reserve
and govt monopoly of money; allow private minting and free choice of
currencies - Part 5 More...:

In 1914, Germany’s Fed Reserve, the Reichsbank, suspended conversion of
its paper money into gold. By November 1923, after continual “injections of
liquidity,” Reich Marks in circulation soared past 92.8 quintillion Marks
and skyrocketed past 496 quintillion Marks through July of 1924. On Oct 25,
1923, the Reichsbank apologized that it had been able to only print 120
quadrillion Marks that day, but the demand was for one quintillion Marks.
Finally, after nobody would accept the Mark, the Reichsbank devalued to a
new Rentenmark convertible at 1 trillion to one. By Nov 1923, circulation
had increased 245 billion times and prices 1,380 billion times. Inflation
finally stopped in one day when 4.2 Rentenmarks (4.2 trillion old Marks)
exchanged for 1 Dollar, which was convertible into gold. Germany, via the
Dollar, finally went back to the gold standard, after destroying its entire
economy in 9 years through hyperinflation of its non-backed paper money.
– Dr.
H. Hazlitt, Economist

Sound familiar?

Today, in 2007, after FDR dumped the gold standard in 1933 and Nixon cut
all dollar ties to gold in 1971, our derivative markets currently exceed a
half a quadrillion dollars or $500,000,000,000,000 – five hundred trillion
dollars – of non-collateralized paper fueled by America’s central bank, the
Federal Reserve. And what is it that everybody is screaming for more of?
The injection of billions and billions of more non-collateralized paper
money as “liquidity” to “spur” the “growth” of the economy.

Yesterday’s announcement by the Federal
Reserve and other central bankers is a prescription for global economic
disaster. It will no doubt usher in martial law and the loss of many
freedoms as all nations abandon their agreements after they discover they
have just made the market worse. It may even cause another war.

The big question is:
When will Americans and other nations wise up, dump their non-backed paper
money and central banks, and finally go back to a stable gold standard with redeemable paper money backed 100% by gold? Personally,
I’m getting tired of listening to all the phony baloney econ pundits on TV
and Fed Chief Ben Bernanke tell us that the solution to our valueless paper
money is to print up trillions and trillions more paper and credit and
inject it into the banking system. As it turns out, Keynesian Econometrics
really is just one big pile of hyper-inflated Horse Shit. -- FM Duck